The Green New Deal
The Green New Deal
The person who has been following the run-up to the US Presidential elections in November 2020 must have certainly heard of the Green New Deal. Democrats have made it their election agenda and are now campaigning to convince the populace of the US to vote for this ambitious reshuffling plan for the economy and the climate. Officially the Green New Deal is a congressional resolution (non-binding), introduced by Democrat Alexandra Ocasio-Cortez, which puts forward a roadmap for the US government to move towards an emissions-free economy. The objectives of the Green New Deal are not limited to tackling climate change and restructuring the energy mix of the US economy; it also seeks broader socio-economic changes to enable a greener growth which is equitable and socially just. Battling the recent rise in wealth and income inequality is also the target of the Green New Deal. The ambitious scope of the plan justifies its name which is influenced from the Roosevelt era ‘The New Deal’, which sought to pull up the United States from the Great Depression.
In the European context, the objectives of the Green New Deal seek to even waive off debts and a complete restructuring of the financial system along with a revamp of the energy systems. The European version is rooted in a 2007 report by the Green New Deal Group titled ‘A Green New Deal - Joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices’, which was authored by a group of environmentalists and new age economists.
The calls for an urgent adoption of a plan with the scope and ambition of a Green New Deal started becoming vocal after the 2018 United Nations report which predicted that the current trajectory is bound to take earth on the path to large scale destructions by climate change as soon as 2040. The US congressional resolution for the Green New Deal bids for undertaking structural changes within a ten-year time frame. Although technologists have warned that achieving that goal so soon is not feasible and could take 40-50 years before a transformative change could be experienced. Recent improvements in the renewable energy and storage technologies and their decreasing costs offers some hope for a complete energy transformation from fossil fuels to clean sources. While it might be easier to move away from coal and petroleum but shedding natural gas completelyfrom the energy mix could take time. Mark Z. Jacobson, a Stanford University professor has put forwarded a step by step plan for a complete overhaul of the energy mix towards a net zero emissions target and concluded that the same can be achieved by 2040-2050 within the exiting technological framework. His proposal calls for all energy requirements to be met with electricity and heat which can be generated from solar, wind and hydro resources only. The proposal seems convincing considering the fact that electric vehicles are gaining ever increasing acceptance and the costs are coming down. Electricity requirements can similarly be met with solar and wind plants and efforts can be made to shift the industries from fossil fuels to electricity. The only major energy-consuming sector which doesn’t fit the electrification plan with existing technology is long distance air and sea travel.
The other major challenge with implementing an economy wide Green New Deal is the costs associated to it. So far, it would be safe to say that no reliable magnitude of the estimated costs for implementing a Green New Deal has been presented. The supporters always seem to take lenient cost estimates while the opposition sky rockets it to unimaginable heights. Although, there is consensus that whatever the costs, they will be high in comparison to any major restructuring plan which has ever been undertaken by the economy. Ann Pettifor, one of the authors of the Green New Deal (2007), argues that the entire plan would pay for itself. She bases this argument in the reasoning that when the government borrows money for the Green New Deal from commercial banks it will lead to higher investments and job creation in the economy which will result in increasing tax revenues and a payback of the initial borrowing. Another front from where the money could be raised is through the central bank adopting Quantitative Easing measures. Though conventional economic wisdom suggests that an expansionary monetary policy should be complemented with a contractionary fiscal policy or else it will lead to heavy inflation, Pettifor challenges that wisdom. Alexandra Ocasio Cortez has vouched for adopting an expansionary monetary policy approach which argues that it doesn’t always lead to inflationary pressures in the economy. This economic paradigm is quite new and is referred to as Modern Monetary Theory which argues that a ‘sovereign currency issuer’ can issue as much currency as it wants without a worry for inflation. However unconventional it may seem, research is going on in that direction to present a new economic paradigm for the world economy which helps in tackling the issues ahead.
The economic and technological challenges still seem fathomable by concerted efforts but it is the politics of it which is the biggest obstacle in any major transformation of the economy. Conservative politicians in the US have called the Green New Deal a socialist conspiracy to take away ‘your ice-creams’. It is high time that politicians across the ideological spectrum shed their petty political interests and look for a viable solution to this imminent challenge being faced by the world.
The author is a Master's student at the School of International Studies, Jawaharlal Nehru University, New Delhi.